The Ministry of Strategy and Finance's budget execution management department, which was disbanded three years ago, will be reorganized into a regular organization. This decision comes as the importance of supporting 'quick execution of fiscal spending' has become more crucial than ever to boost economic vitality amid the heightened economic instability following the martial law situation.
According to the government on the 4th, the Ministry of the Interior and Safety, which has the authority to reorganize government organizations, recently decided to restructure the Ministry of Strategy and Finance's budget execution management division into a regular organization. The budget execution management division, established under the directive 'Regulations on the Establishment and Operation of the Autonomy Organization Budget Execution Management Division,' is responsible for supporting the execution of fiscal projects and performance generation. It was scheduled to operate from February of last year until this month.
According to the 'General Rules on the Organization and Staffing of Administrative Agencies,' the autonomy organization is a director-level organization that operates using temporary staffing. In principle, it is operated on a temporary basis for a maximum of one year (6 months + 6 months).
The predecessor of the budget execution management division was the 'Budget Execution Management Division' established in 2017. The budget execution management division had been a regular organization overseeing the inspection of major fiscal project execution, coordination of budget execution policies between ministries, and resolving issues in budget execution, but it was disbanded in March 2022. This action was taken because the Ministry of the Interior and Safety determined that it was more efficient to integrate budget execution management functions into other departments rather than maintain a separate organization.
At that time, the Ministry of Strategy and Finance immediately formed an emergency response team in the form of an autonomy organization to continue budget execution management tasks. Since then, the organization has continued with only its name changed to a temporary body performing the same tasks each February.
However, this year, the Ministry of the Interior and Safety has changed its stance. As the economic instability began around the end of last year with the declaration of martial law, a consensus was formed that 'the importance of budget execution has increased more than ever.'
The Bank of Korea lowered its forecast for the country's economic growth rate this year to between 1.6% and 1.7% on the 20th of last month, down 0.2 to 0.3 percentage points from the forecast of 1.9% made in November last year, before the martial law situation. Political uncertainty, economic psychological contraction stemming from this, and the expansion of external economic uncertainty due to the upcoming inauguration of Donald Trump's second term in the U.S. are all analyzed to be factors that will drag down the growth rate.
To respond to domestic economic stagnation, the government is 추진하고 있다 the largest 'quick execution of fiscal spending' in history during the first half of this year. Quick execution of fiscal spending refers to the government executing its budget ahead of the initially planned schedule, which aids in stabilizing the economy and improving the efficiency of fiscal operations. For example, if a corporation that received a loan at an interest rate of 4% can access policy financing at an interest rate of 2% sooner, it significantly alleviates the corporate burden.
The government established a goal to swiftly execute 358 trillion won of the total annual budget execution plan of 562.5 trillion won in the first half of the year. This figure is an increase of 6.9 trillion won compared to the previous year. Specifically, it is set at 67% (170.2 trillion won) for central government finance, 60.5% (170.9 trillion won) for local government finance, and 65% (65 trillion won) for educational finance.
The Ministry of the Interior and Safety plans to soon finalize administrative measures for the organizational restructuring. A Ministry of the Interior and Safety official noted, 'The timeliness of the necessity for overcoming the economic crisis has been recognized; thus, the budget execution management division will be organized as a regular organization' and mentioned that the Presidential Decree for the Ministry of Strategy and Finance's organization would be amended within this month.
In contrast, the regularization of the autonomy organization 'International Investment Cooperation Group,' which the Ministry of Strategy and Finance has pursued since the end of last year, has been completely scrapped. The cooperation group was temporarily established to support the $30 billion domestic investment by the United Arab Emirates (UAE), secured by President Yoon Suk-yeol at the beginning of 2023, but the need for expanding its role has been raised as the significance of attracting foreign capital increased with the inclusion in the World Government Bond Index (WGBI) last year.
A Ministry of Strategy and Finance official explained, 'While attracting foreign capital is important, we judged that its urgency is lower than budget execution management, and thus, we decided to reevaluate the regularization of the cooperation group.'
The Ministry of Strategy and Finance is considering having its regular department, the Financial Cooperation Division, take over the tasks of the cooperation group for foreign capital attraction and UAE investment support while establishing a new autonomy organization called 'International Cooperation Ambassador Support Team.' It is expected that the directive for the autonomy organization will be announced as early as this week.
A Ministry of Strategy and Finance official stated, 'The support team is an organization aimed at practically supporting the economic diplomacy of International Investment Cooperation Ambassador Choi Jung-kyung and International Financial Cooperation Ambassador Lim Jong-kyung.' They are reviewing plans to receive support personnel from Invest Korea and organize a team of around five members.